It is looking dire for 38 Studios, the Kingdoms of Amalur: Reckoning studio set up with a huge hunk of public funding from a Rhode Island jobs creation program. So now, we're talking about an operation that took taxpayer money with the intent of creating jobs and can't pay the employees working in them. That's about the worst outcome possible.

Curt Schilling, well known as a key member of the 2004 World Series Champion Boston Red Sox—the franchise's first world champion in 86 years—is also an avid gamer. So, after his 2007 retirement he founded a development studio that sought a loan from Rhode Island's Economic Development Corporation back in 2010, intending to bring jobs to that state. The loan was said to be $75 million; the Corporation had $125 million in funds to disburse. 38 Studios has received about $50 million in funds so far, reports WPRI-TV of Providence, R.I.

Joystiq has reported that 38 Studios, in addition to missing a $1.125 million installment payment because of insufficient funds, also missed payroll this week for its employees. "Project Copernicus," the code name for the studio's next game, won't be ready to show at E3 in a few weeks, so the studio pulled out of that show.

The state's Economic Development Corporation held an emergency meeting yesterday to address 38 Studios' crisis and examine the options. The state's governor is trying to make the deal work, but it has already cost one person his job: Keith Stokes, the executive director of the Economic Development Corporation, who engineered the deal for 38 Studios. He resigned yesterday.